KAISILK DEVELOPMENT LTD v. URBAN RENEWAL AUTHORITY

CACV 191/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 191 OF 2002

(ON APPEAL FROM HCA NO. 10017 OF 2000)

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J U D G M E N T

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Hon Rogers VP:

1. This is an appeal from a judgment of Deputy High Court Judge Woolley given on 12 March 2002 whereby he struck out the statement of claim on the basis that it did not disclose a reasonable cause of action and was an abuse of the process. At the conclusion of the hearing of this appeal this court reserved its judgment which we now give.

Background

2. The plaintiff is a property developer and the defendant is a corporation which was established under the Land Development Corporation Ordinance (Cap. 15) ("the Ordinance"). By the action the plaintiff seeks a declaration that it is entitled to compensation from the defendant calculated by reference to the difference between the "true" value of property which it held in Wanchai "as (at) July 1997, or any other material date as may be determined by this Court, and the amount of compensation payable or paid to the plaintiff under the Land Resumption Ordinance". It also seeks an order for payment of that compensation and damages.

3. As originally framed the statement of claim ran to 17 pages and was tolerably comprehensible, as opposed to sustainable. By an amendment in July 2001 the statement of claim was expanded to 59 pages. It now contains allegations which are irrelevant, in parts incomprehensible and, for the most part, contains a recitation of the history of dealings between the parties that have no place in a pleading and are contrary to the established rules of pleading enshrined in the rules of the High Court. I would refer specifically to Order 18 rule 7 which requires that:

"... pleadings must contain, and contain only, a statement in a summary form of the material facts on which the party pleading relies for his claim or defence, as the case may be, but not the evidence by which those facts are to be proved, and the statement must be as brief as the nature of the case admits."

This court drew the attention of the plaintiff's counsel, Mr Holgate QC, to the fact that large parts of the statement of claim, specifically those which had been incorporated by amendment, were a flagrant breach of those rules. Mr Holgate did not seek to argue otherwise, although he tentatively suggested that some of the matters might have been suitable for particulars, had they ever been requested. Even then, it is difficult to imagine circumstances in which averments in the nature of some of those contained in this pleading, such as the plaintiff's involvement in the development of properties that have nothing to do with this case, are anything other than irrelevant and consequentially embarrassing. In my view, the way the pleading has been framed is tantamount to an affront to the court. The turgid recitation of the history of the dealings between the parties apparently contained material averments interspersed in the history. The whole pleading is reminiscent of the nature of the statement of claim in the case of Davy v Garrett (1887) 7 Ch. D. 473, which was so roundly criticised by the Court of Appeal and in particular by James LJ.

4. Despite the defects in the statement of claim, the judge below was able to discern what were said to be the elements of the claim raised by the plaintiff. In this court, 3 bases for the claim were put forward. The first was breach of statutory duty, the second was breach of common law duty and the third was estoppel by convention.

5. The claim arises from negotiations which took place between the plaintiff and the defendant's predecessor, the Land Development Corporation. The history of the matter effectively started in May 1995 when the Town Planning Board approved a Scheme Plan and published it with an explanatory statement which indicated that the defendant intended to acquire properties in Wanchai. The properties that the defendant would acquire included properties in the area of Wan Chai Road and Stone Nullah Lane owned by the plaintiff ("the Properties").

6. Negotiations between the plaintiff and the defendant extended between 1996 and 1998. A first offer to purchase the Properties was made by the defendant in November 1996. The amended statement of claim pleads the offer as having been $102,960,000 plus $3,607,000 and that it was open for acceptance for 3 months. That offer was not acted upon and the pleading then refers to a second offer of $123,838,000 plus $4,294,000 being made on 11 August 1997. That is said to have been open for acceptance for 28 days. It is then pleaded that, on 22 September 1997, the defendant requested the Secretary for Planning, Environment and Lands ("the Secretary") to recommend to the Executive Council that the Properties be resumed. The procedure under which that is done will be referred to below. The pleading then indulges in a lengthy recitation of negotiations between the parties until it refers to a third offer by the defendant to purchase the Properties for a total of $132,816,000. That was said to have been made on 4 May 1998. That offer was said to have been expressed to have been open for 14 days and to have been followed by a letter, 3 days later, stating that if the offer were not accepted, the defendant would await the outcome of the application for a recommendation for compulsory acquisition. That offer was accepted in respect of part of the Properties. The pleading then continues that on 21 September 1998 the plaintiff offered to sell the remainder of the Properties on the terms set out in the defendant's third offer but that was rejected. Before dealing with the plaintiff's complaints it would be convenient to consider the scheme of the Ordinance.

The Ordinance

7. The Ordinance dates from 1988. It has now been repealed but there is no dispute that its provisions are applicable to the present case. Hence, for the purposes of this judgment it will be treated as if it is still in force. Its stated purpose is to establish a corporation for the purpose of urban renewal and matters incidental thereto. The defendant is established under section 3 of the Ordinance, by which it is given the powers and duties which are conferred and imposed on it by the Ordinance. It is significant that the chairman is not a public officer. There are five further members who are not public officers and three members who are. There is also a chief executive. His position and functions are set out in the First Schedule of the Ordinance. It is important to note that the First Schedule states that the defendant shall not be regarded as a servant or agent of the Government of the HKSAR.

8. The purposes of the defendant corporation are specifically defined in section 4 of the Ordinance. That states, unambiguously, that the corporation's purpose is what might be categorised as the facilitation of urban renewal. The corporation is given all the necessary powers, including the power to purchase and acquire land, to carry out its specified purposes. There can be no doubt that the legislature regarded these purposes as being in the public interest. The finances of the defendant are dealt with in Part III of the Ordinance. Although the initial funds are to be provided by the Government, it is clearly envisaged that the corporation should, if possible, be a self-financing organisation. Furthermore, the Financial Secretary may, after consultation, direct the corporation to repay monies to the Government out of any excess. Importantly, section 10(1) of the Ordinance provides that:

"The Corporation shall conduct its business according to prudent commercial principles, but with the approval of the Financial Secretary may engage in projects which are unlikely to be profitable."

It seems to me that 2 things follow from the wording of that subsection: the first is that the corporation should direct its affairs with a view of profit. That is the clear meaning of the words "commercial basis". The second is that there may be some relaxation of the commercial basis, but that can only be if the Financial Secretary approves.

9. Under Part IV of the Ordinance the defendant is given power, with the approval of the Secretary, to prepare development schemes comprising a plan which the Secretary may then submit to the Town Planning Board for approval. One of the features that is specifically relied upon by the plaintiff, because it is said to be an element of what constitutes a blight on the property, is that a plan may provide that any development that is not compatible with a scheme which is submitted is prohibited.

10. Under section 15 of the Ordinance, the defendant can request the Secretary to recommend to the Chief Executive in Council that land be resumed under the Lands Resumption Ordinance (Cap. 124) ("the LRO"). Subsection 15(2)(a) requires that the application by the defendant to the Secretary can only be made if it has been unable to acquire any land within the area of a plan. In contrast, subsections (3) and (4) provide that the Secretary shall not make any recommendation to the Chief Executive "unless he is satisfied that the Corporation has taken all reasonable steps to otherwise acquire the land including negotiating for the purchase thereof on terms that are fair and reasonable."

11. The provisions of section 15 were considered by the Court of Appeal in Wong Tak Woon v Secretary for Planning Environment and Lands, CACV 339 of 1999, 11 January 2000. Ribeiro J (as he then was) pointed out that the section envisages that the defendant should, if possible, agree with the owner of the relevant property a price which is fair and reasonable and that all reasonable efforts should be made in that regard. In his analysis of the section, Ribeiro J pointed out that the section was predicated upon the ultimate result, if disagreement as to the price persisted between the relevant parties, being adjudication by the Lands Tribunal under the LRO. Ribeiro J observed that, in the first place, a proper reading of section 15 of the Ordinance led to the conclusion that a challenge to the fairness and reasonableness of an offer by the defendant was not, prima facie, the proper subject matter for judicial review. He went on to say at page 16:

"Given that the section prescribes a negotiation against the backdrop of machinery for resumption in the event that agreement cannot be reached, it is in my view clear that when formulating purchase offers intended to be 'fair and reasonable', it is entirely proper that the LDC should be guided by considering the level of compensation which the landowner could achieve if he were to reject that offer and compel the LDC to invoke the machinery for resumption. The LDC may, in other words steer a 'fair and reasonable' course by reference to what is possible under the LRO."

12. There can, in my view, be no doubt that this analysis is correct. Indeed, application was made to appeal that decision to the Court of Final Appeal. That application was dismissed. Bokhary PJ, in giving the determination of the Appeal Committee, referred specifically to Ribeiro J's reasoning and said:

"We see no reasonable prospect of the Court of Final Appeal taking a different view on any of those grounds ..."

13. Mr Holgate QC sought to argue that a decision of the Appeal Committee was not binding authority. In my view, that is nothing to the point. Ribeiro J gave a cogent analysis of the meaning and effect of the section. The Appeal Committee agreed with what he had to say. Nothing has been said in this Court which would detract one word from that.

The underlying complaints

14. The plaintiff's grounds of complaint stem, in the first place, from the fact that there was a substantial fall in the value of property in Hong Kong starting in October 1997. The plaintiff's concern is that the Lands Tribunal will be required to assess the amount payable under the LRO on the basis of the value of the resumed property at the date of the resumption. The plaintiff puts its complaints on the basis that the defendant delayed at least in the period from September 1997, when the second offer, that made in August 1997, lapsed. The delay is alleged to have been a lengthy period up until May 1998 during which period the plaintiff claims to have pursued the defendant with a view to coming to an agreement.

15. Underlying the plaintiff's claims is the proposition that the mechanism of the Ordinance, under which the defendant is established and operates, inevitably puts a "blight" on the relevant property once the defendant has commenced steps with a view to redevelopment of the property. The point which is made on behalf of the plaintiff is that because of the planning restrictions and the defendant's obvious intention to purchase the property, a land owner loses the opportunity to develop the property itself or otherwise deal with the property and has to stand by whilst its property falls in value. This was collectively referred to in argument as the blight upon the property.

16. Coupled with that, it is said that the plaintiff was liable to suffer considerably should the defendant act in a manner which was not in keeping with its professed manner of operation. Heavy reliance was placed by Mr Holgate QC on the defendant's "acquisition principles". Those included, for example, that the defendant would offer a price which would be based on the higher value of at least two valuations by two independent professional firms of surveyors. If acquisition were successful the defendant would pay the reasonable costs of a property owner engaging its own professional surveyors. According to the acquisition principles, the defendant would make an offer which was between 10-20% in excess of the existing use value or the property market value, depending on the nature of the property. That, however, must be a carrot designed to entice property owners to accept offers from the defendant on the basis that they would be better off to do so rather than leaving matters to the Lands Tribunal.

17. Complaint is made that in putting forward the third offer in May 1998 the defendant acted unreasonably and failed to negotiate on terms which were fair and reasonable. A number of complaints were made. These include the shortness of time given for acceptance of the third offer, the fact that a valuation report had to be requested from the defendant, the fact that the defendant did not reveal or act upon a report, given by its own valuer, as to the adequacy of the plaintiff's counter offer made after the third offer and the fact that the defendant refused to continue negotiating after the peremptory short period for acceptance of its offer had expired.

18. Specifically complaint is made that the defendant delayed, that it was not prepared to deal with the plaintiff on terms which were fair and reasonable and that it should have accepted plaintiff's September 1998 offer, which, even on the plaintiff's case, was based on a historical price as at the height of the market, and the plaintiff's September 1998 offer was made at a time when the market had dropped appreciably.

19. In contrast, the defendant points to the plaintiff's pleading that, in September 1997, it had already put in a request that there be a recommendation for resumption. Furthermore, when it made the third offer in May 1998, it informed the plaintiff within three days that if it did not accept the third offer, the defendant would await the outcome of its application for resumption. The lapse of the third offer was thus final and the plaintiff was under no obligation, whether under statute, morally, or otherwise to continue negotiations. Still less was there any obligation to continue negotiations on the basis upon which the plaintiff then wished to continue them.

20. As Mr Holgate QC pointed out in the course of argument, it would be inappropriate in considering an application to strike out the pleading to reach conclusions as to disputed facts. What it is necessary to consider is whether the material facts, pleaded in the statement of claim, give rise to a valid cause of action. In this respect the manner in which the amended statement of claim presents the essential allegations which go to found the basis upon which it is alleged that a claim may be brought are obfuscated by the plethora of narrative history which adds nothing to the essential allegations.

21. The plaintiff's claim was struck out by the judge on all grounds upon which it was made. In my view, the judge took the correct course and each ground will be examined separately.

Breach of statutory duty

22. The first basis of the claim put forward by the plaintiff is that there was a breach of statutory duty. This argument has to be based upon a construction of the statute. The formulation of the statutory duty which is said to arise has been the subject of some modification through the various drafts of the statement of claim. Indeed, at the hearing of this appeal a further draft of the implied statutory duties was put forward on behalf of the plaintiff. Paragraph 1 of that formulation reads that there was

"A dual obligation (a) to take all reasonable steps to acquire the Properties otherwise than by seeking resumption and (b) to negotiate to purchase the Properties on terms that are fair and reasonable."

There were further formulations of what the plaintiff regarded as implied statutory duties. The first was that the defendant should take into account the requirements of Articles 8 and 105 of the Basic Law with a view to the plaintiff receiving compensation for any blighting effect. The other paragraphs appear to me to add little save that the plaintiff relies upon Articles 6 and 105 of the Basic Law to reinforce its claim that a statutory duty exists that can found a private law cause of action.

23. There are two questions which arise upon this allegation. The first is as to the nature of the statutory duty which is imposed upon the defendant and the second is as to whether a breach of that statutory duty gives rise to a cause of action by a land owner, namely, in this case, the plaintiff.

24. The nature of the duty which is imposed upon the defendant by the Ordinance has been considered above. The duty imposed upon the defendant is to conduct urban renewal according to prudent commercial principles. It is given power to put forward proposals and, if those proposals are accepted by the relevant authorities, it can then progress to attempt to acquire any necessary land. A request for a compulsory purchase order will only be acceded to by the Secretary if the defendant has taken all reasonable steps to acquire the land by negotiation on terms that are fair and reasonable. If the defendant cannot so satisfy the Secretary, it cannot acquire the land compulsorily and, unless it can otherwise acquire the land, its scheme will fail. This would leave the way open for any other person or body to put forward further proposals and seek other planning permission.

25. It is trite law that, in the ordinary case, a breach of statutory duty does not, by itself, give rise to any private law cause of action. In the words of Lord Browne-Wilkinson in X (Minors) v Bedfordshire County Council [1995] 2 A.C. 633 at 731D-E:

"... a private law cause of action will arise if it can be shown, as a matter of construction of the statute, that the statutory duty was imposed for the protection of a limited class of the public and that Parliament intended to confer on members of that class a private right of action for breach of the duty."

Lord Hoffmann expressed the same view in Stovin v Wise and Norwich County Council [1996] A.C. 923 at 952F when he said:

"Whether a statutory duty gives rise to a private cause of action is a question of construction: see Reg. v Deputy Governor of Parkhurst Prison, Ex parte Hague [1992] 1 A.C. 58. It requires an examination of the policy of the statute to decide whether it was intended to confer a right to compensation for breach."

In my view, the plaintiff has not begun to show that it was the intention of the legislature to provide a private right of action to property owners for any breach of any statutory duty by the defendant.

26. The Ordinance does not specify a remedy for a property owner whose property is sought to be acquired by the defendant as part of one of its projects other than compensation for the compulsory acquisition of the land assessed on accepted and established principles. Equally importantly, there is no provision in the Ordinance which manifestly imposes a duty on the defendant to protect a property owner's interests in any specific way. Rather, as already pointed out, the scheme of the Ordinance is to facilitate urban renewal. That is the purpose of the Ordinance. That is the purpose for which the defendant exists. Moreover, it is the intention, expressed in the Ordinance, that the defendant should be profit making. No doubt, a property transaction would not take place unless a reasonably attractive price were offered by the purchaser. That does not mean, however, that section 10 requires the defendant to offer terms other than those which are favourable to it, consistent with efficient operation.

27. As was pointed out by Ribeiro J, the negotiation as to price is made against the backdrop of compensation being assessed by the Lands Tribunal under the LRO. The parties know that, if they do not reach agreement, there is a probability that the price will be settled by the Lands Tribunal. The requirement imposed upon the defendant under section 15(2) is that it shall have been unable to acquire a specific piece of property. Subsections (3) and (4) prohibit the Secretary from making a recommendation for compulsory purchase unless he is satisfied that all reasonable steps to acquire the land in any other way, including offering fair and reasonable terms, have been taken. It is, however, for the Secretary to be so satisfied. That gives a property owner the measure of protection which the legislature has envisaged is appropriate in the circumstances. Satisfaction of such a matter must be a subjective assessment. It is an assessment to be made by the Secretary and nobody else. The intent of the provision that the Secretary should be so satisfied that fair and reasonable terms had been offered is the avoidance of unnecessary applications for land resumption with consequential proceedings in the Lands Tribunal. Such proceedings are expensive and, if avoidable, are a waste of resources and cause delay. If such proceedings can be avoided, it is obviously to everybody's advantage, not least that of the public, that that should be done.

28. There is a one year time limit from the date of the approval under section 9 of the Town Planning Ordinance for the defendant to make an application to the Secretary requesting him to recommend resumption under the LRO. After that period has expired, unless there is an extension the defendant will be put in the position of either having to negotiate on terms which, effectively, the land owner can then dictate or else the plan will lapse and the land owner will be in a position either to develop the land itself or to apply to the Town Planning Board with a different plan.

29. In the circumstances it seems to me that the Ordinance has provided a scheme which regulates the conduct of the defendant and I see no scope for holding that a private law cause of action will arise on any implied statutory duty which, in any event, I do not see is owed to the land owner.

Does blight assist in creating a cause of action for breach of statutory duty?

30. As already noted, it was argued that the way in which the Ordinance requires the defendant to go about formulating plans, obtaining planning permission and ultimately acquiring the land, should be regarded as depriving the land owner of some of the rights of ownership of the land, or at the very least creating what is, in effect, a restriction on the exercise of those rights. The loss which is said to have occurred was to be measured by the fall in the value of the Properties during the period of the blight. I do not consider that this way of putting the claim helps, in any way, to establish a private law cause of action. Still less would any loss suffered in this respect be recoverable outside the ambit of compensation under the LRO.

31. In advancing his argument, Mr Holgate made particular reference to the terms of Article 105 of the Basic Law. He emphasized the words "...right of individuals and legal persons to the acquisition, use, disposal and inheritance of property...". It would seem that, in the court below, it was argued that such loss gave rise to a right of action in itself. In this court it was said that it went to establish the existence of some private right of action under the Ordinance. Nevertheless, I do not see that these provisions give a right of action in respect of the formulation and submission of proposals for development, the obtaining of planning permission and the grant of that permission.

32. In the case of Westminster Bank Ltd v Minister of Housing and Local Government [1971] A.C. 508 the House of Lords was concerned with a case that involved planning permission. In the course of his speech, Lord Reid referred to the opinion of the Privy Council given by Lord Warrington in Colonial Sugar Refining Co. Ltd v Melbourne Harbour Trust Commissioners [1927] A.C. 343, 359 where he had said that a statute should not be held to take away rights of property without compensation unless the intention to do so is expressed in clear and unambiguous terms. That proposition was accepted by Lord Reid. He also considered that it would be too meticulous a distinction to regard the prevention of the exercise of private rights of property because of planning constraints as not being a deprivation of property. But he went on to say at page 529E-F:

"But it is quite clear that when planning permission is refused the general rule is that the unsuccessful applicant does not receive any compensation. There are certain exceptions but they have no special connection with street widening. If planning permission is refused on the ground that the proposed development conflicts with a scheme for street widening, the unsuccessful applicant is in exactly the same position as other applicants whose applications are refused on other grounds. None of them get any compensation."

33. This rule was referred to by Lord Hoffmann in giving the opinion of the Privy Council in the case of Grape Bay Ltd v Attorney-General of Bermuda [2000] 1 WLR 574. He explained the rationale for the rule when he said at page 583C:

"It is well settled that restrictions on the use of property imposed in the public interest by general regulatory laws do not constitute a deprivation of that property for which compensation should be paid. The best example is planning control ..."

34. After referring to the Westminster Bank case, he continued:

"The give and take of civil society frequently requires that the exercise of private rights should be restricted in the general public interest. The principles which underlie the right of the individual not to be deprived of his property without compensation are, first, that some public interest is necessary to justify the taking of private property for the benefit of the state and, secondly, that when the public interest does so require, the loss should not fall upon the individual whose property has been taken but should be borne by the public as a whole. But these principles do not require the payment of compensation to anyone whose private rights are restricted by legislation of general application which is enacted for the public benefit. This is so even if, as would inevitably be the case, the legislation in general terms affects some people more than others."

35. Lord Hoffmann then went on to consider, in particular, the decision in the case of Penn Central Transportation Co. v New York City (1978) 438 U.S. 104. That case concerned an action by the owners of a well-known railway station for compensation because they alleged their property had been taken for a public use within the meaning of the Fifth Amendment of the United States Constitution. The station had been designated a landmark under the Landmarks Preservation Law of New York. Thereafter the owners had been refused permission to build a 55 storey office block on top of the station. Lord Hoffmann cited the case as an illustration of a general law passed in the public interest, notwithstanding the fact that the law only restricted the rights of those people whose buildings happened to have been designated historic landmarks.

36. Lord Hoffmann also drew a distinction between cases in which the authority concerned had acquired a particular right from the individual and cases in which an individual had simply been deprived of the ability to exercise a right by the use of statutory powers in the public interest. This distinction follows as a natural consequence of the rationale for the rule, as explained in the passage quoted above.

37. It is perhaps also noteworthy that Lord Hoffmann cited with approval a statement by Brennan J. in the Penn Central case at page 130:

"'Taking' jurisprudence does not divide a single parcel into discrete segments and attempt to determine whether rights in a particular segment had been entirely abrogated. In deciding whether a particular governmental action has effected a taking, this court focuses rather both on the character of the action and on the nature and extent of the interference with the rights in the parcel as a whole ...."

38. In my view, the plaintiff must fail in this case to establish any right based upon the alleged blight. The defendant was carrying out its duties which were imposed in the public interest. No complaint is made in relation to any matter pertaining to the choice of location or the appropriateness of urban renewal of the area in which the Properties were located.

39. Therefore, even on the basis that the defendant's actions could be considered as amounting to a restriction other than analogous to a planning restriction, which is very doubtful, it does not seem to me to be legitimate, on authority, to divide the right of property in such a way that the court would recognise a right for a land owner to be protected against a restriction on use or disposal. The matter must be looked at as a whole. The whole in the context being compensation on the basis of section 15 of the Ordinance with the backdrop of the LRO.

40. There is then the fact that the so-called blight amounts at the most to a restriction; it does not amount to an acquisition by the defendant of the plaintiff's property. The plaintiff's property is acquired on resumption. Fundamentally, the Ordinance is of general application. It applies to areas that are in need of urban renewal. The area in which the Properties lie are such an area. There is no allegation that the statutory parameters have been exceeded. No case can be founded by the plaintiff simply on the proposition that some scheme or planning consent encompasses the area within which the Properties lie. The fact that the legislation affects the plaintiff but does not affect a property owner in an area which is not in need of urban renewal does not assist the plaintiff.

41. Mr Holgate sought to argue that the courts have, particularly over the last century, expanded the areas within which it has been held that a cause of action for breach of statutory duty exists. That may well be true. It does not, however, mean that there are no boundaries at all. In my view, the plaintiff's case, presented though it is with a view to attracting sympathy, is bound to fail.

The common law duty of care

42. In the X (Minors) v Bedfordshire County Council case, Lord Browne-Wilkinson considered the question of a common law duty of care arising in the performance of statutory functions. He drew a distinction between, on the one hand, cases in which it is alleged that an authority owes a duty of care in the manner in which it exercises a statutory discretion and, on the other hand, cases in which a duty of care is alleged to arise from the manner in which the statutory duty has been implemented in practice. The distinction is thus between taking care in exercising a statutory discretion whether or not to do an act and, having decided to do a particular act, taking care in the manner in which it is done. Mr Holgate put the plaintiff's case on the latter basis.

43. It was said that once the defendant had determined to put forward a plan in respect of the relevant area, it was under a duty not to cause damage, in particular, blight, to the defendant. As Lord Browne-Wilkinson said at page 739B, whether or not a common law duty of care exists has to be decided by applying the usual principles. Those include the question as to whether the damage to the plaintiff was reasonably foreseeable, whether the relationship between the plaintiff and the defendant was sufficiently proximate and whether it was just and reasonable to impose a duty of care. He went on to say:

"However the question whether there is such a common law duty and if so its ambit, must be profoundly influenced by the statutory framework within which the acts complained of were done."

One of the matters to which he drew attention was that a common law duty of care could not be imposed on a statutory duty if the observance of such a common law duty of care would be inconsistent with, or have a tendency to discourage, the due performance by the authority concerned of its statutory duties.

44. Before turning to the present case it is also pertinent to refer to what was said by Lord Hoffmann in Stovin v Wise and Norwich County Council at page 952F. He pointed out that the existence of a common law duty of care was not exactly a question of construction because the cause of action does not arise out of the statute itself. What is important, however, is the policy of the statute. He quoted from Lord Browne-Wilkinson and then went on to say:

"The same is true of omission to perform a statutory duty. If such a duty does not give rise to a private right to sue for breach, it would be unusual if it nevertheless gave rise to a duty of care at common law which made the public authority liable to pay compensation for foreseeable loss caused by the duty not being performed. It will often be foreseeable that loss will result if, for example, a benefit or service is not provided. If the policy of the act is not to create a statutory liability to pay compensation, the same policy should ordinarily exclude the existence of a common law duty of care."

45. The way in which the plaintiff's case is put as to the existence of a common law duty of care is that the defendant was required to exercise its functions under the Ordinance, particularly in the negotiation and acquisition of the plaintiff's property, with reasonable care. What is, therefore, being contended for is that there is a duty of care on the defendant in dealing with a party with whom it is negotiating for the acquisition of their property. For my part, I cannot see any basis upon which such a duty could be founded in the context of the defendant and the Ordinance. To suggest that the defendant owes a duty of care to a party from whom it is attempting to acquire property, against the background of a statutorily enforced valuation and compensation, when it is under a statutory obligation to act commercially, seems to me to be impossible. In my view, such a duty of care would, at the very least, have a tendency to discourage, if not be inconsistent with, the due performance of its statutory duties.

46. In support of his contention that a common law duty of care existed, Mr Holgate relied upon the case of Lonrho plc v Tebbit and another [1992] 4 All ER 280. In that case the Monopolies and Mergers Committee had concluded in a report that a merger situation involving Lonrho might be expected to operate against the public interest. As a result, Lonrho had been invited to give, and gave, an undertaking to the Secretary of State that it would not, by itself or with other persons, seek to increase its shareholding in the target company to 30% or more. That undertaking was given in 1981. In 1985, a further report from the Monopolies and Mergers Commission was given to the Secretary of State. The conclusion of this further report was that the acquisition by Lonrho would not operate contrary to the public interest. Despite requests by Lonrho for the release of the undertaking, that was not forthcoming. Subsequently, the target company was taken over by other parties. In that case the defendant accepted that, having obtained the 1981 undertaking at a time when the Secretary of State was justified in obtaining it, he came under a continuing duty under public law to review that undertaking if there were material changes in the situation. The decision of the Court of Appeal in that case was on a strike out application. The Court of Appeal, even in that case, considered that the plaintiff's case faced considerable difficulties, but it was not prepared to strike it out at the early stage.

47. It seems to me that the Lonrho case is a very far cry from the present case. The plaintiff in that case gave an undertaking whilst under some pressure to do so. It is trite law that if an undertaking is given to a court, there is, except in the most exceptional circumstances, a corresponding cross-undertaking to safeguard the party giving it as to any damage it might suffer, should the undertaking prove to have been wrongly required. It is understandable that if a party gives the Secretary of State an undertaking, it might be said that it was the duty of the Secretary of State to review the necessity for that undertaking if the circumstances changed. I do not see, however, how the decision in that case in any way affects the present situation. Neither do I see that any of the language used in the judgments in the Court of Appeal can affect this case. In my view, the plaintiff's case for breach of common law duty of care is unsustainable.

Estoppel by convention

48. On this aspect of the case, the plaintiff contends that an estoppel has arisen which gives rise both to an independent cause of action as well as being relevant evidence in relation to the question of existence of a common law duty of care. I find it difficult to see how the latter arises but having dealt with the common law duty of care, I do not intend to comment any further on that aspect. The plaintiff's case on the estoppel proper is that the defendant is estopped from denying that it would continue to negotiate with the plaintiff to acquire the properties on the basis of what is pleaded as being the relevant value which is either the July 1997 value of the Properties or values which take into account the blighting effect caused by the defendant's scheme.

49. The estoppel which is said to arise is that the defendant would continue to negotiate with the plaintiff on the basis of what were said to be representations and its practice as well as the acquisition principles. In summary this amounted to what was said to be the defendant's representation that it intended to acquire the Properties on terms which were fair and reasonable and that it would continue to do so on the basis of July 1997 property values. For my part, again, I am unable to see how such a cause of action can arise.

50. Normally an estoppel will arise if both parties have proceeded on a common assumption of fact and it will then not be open to one party to resile from that common assumption. The matters which are said to give rise to the estoppel in this instance are not matters of fact. They relate to the future. For example, it is that the negotiations would be conducted on the basis of the 1997 valuation. In the case of Bank of Tokyo-Mitsubishi Limited v Lee Hoi Kwong [2000] 4 HKC 530 at 536E Le Pichon JA said:

"The appellant's submissions on estoppel were difficult to follow. 'Consensual waiver' became estoppel, encapsulated by the Panchaud Frères principle, and then 'estoppel by convention'. This type of estoppel is explained in Chitty on Contract at para 3-102 as follows :

'To give rise to an estoppel by convention, the mistaken assumption of the party claiming the benefit of the estoppel must, however, have been shared or acquiesced in by the party alleged to be estopped; and both parties must have conducted themselves on the basis of such a shared assumption : the estoppel "requires communications to pass across the line between the parties. It is not enough that each of two parties acts on an assumption not communicated to the other." Such communication may be effected by the conduct of one party, known to the other. But no estoppel by convention arose where each party spontaneously made a different mistake and there was no subsequent conduct by the party alleged to be estopped from which any acquiescence in the other party's mistaken assumption could be inferred.' (emphasis added)"

51. Quite apart from that, there appear to me to be a number of other matters that would preclude any estoppel by convention arising in this case. In the first place, an estoppel must be sufficiently certain to enable a court to give effect to it. One particular matter which arises in this case is the question as to whether the defendant was bound to continue to negotiate on the basis of the July 1997 valuation figures. Not only, as the judge pointed out, was there nothing to support the proposition that this was a common assumption by both parties, but the question arises as to how long any such common assumption extended. Mr Holgate, in argument, tried to suggest possible dates. The more the submission proceeded with alternative dates being suggested, the more impossible it seemed to me that it could be suggested that there was any clear date involved.

52. Furthermore, on the pleading, I do not see, even on the myriad of matters included therein, that there is anything capable of being the foundation of a proposition that the defendant had communicated that it would continue negotiating on the basis of the July 1997 valuations. Indeed, what is equally to the point, as the judge pointed out, as pleaded in the statement of claim, the defendant made clear, in its letter of 22 May 1998, that it rejected the plaintiff's counter offers and reminded the plaintiff of its application to the Secretary to recommend resumption and that it would be relying on that application. The judge, no doubt, also had in mind paragraph 88 of the amended statement of claim. That pleaded the defendant's letter of 7 May 1998 as stating that if the plaintiff did not accept the third offer, the defendant would await the outcome of its application that there be a recommendation for resumption.

53. There is also the question as to whether an estoppel, such as is pleaded in this case, can be used as a basis of a claim as opposed to a defence. I do not consider that it can, but in view of my firm conclusion as to the remainder of the case on estoppel, it is unnecessary to consider the matter any further.

54. In my view, as with the other aspects of the plaintiff's claim it is doomed to failure.

Abuse of process and issue estoppel

55. The judge below approached this aspect of the case on the basis that it was unnecessary for him to deal with it in view of his decision on the remainder. He came to the conclusion, however, that insofar as the statement of claim raised issues which had been raised in the judicial review proceedings before Cheung J, which was the subject of his decision of 10 March 2000 it was an abuse of process. In my view, he cannot be faulted in that. It is true that technically an estoppel does not arise because the parties in the judicial review application were the plaintiff and the Secretary. Nevertheless it has to be observed that the defendant itself appeared as an interested party. Even if it had not done so, given the scheme of the Ordinance, I consider it would be an abuse of process for the plaintiff to raise issues which had already been raised and decided in that case. It is not necessary to examine the extent of the plaintiff's disability to do so any further, since, in view of my decision on the remainder of the case, it would be a pointless exercise.

Conclusion

56. I, therefore, consider the judgment below was correct and I do not see any grounds for altering it in any way. This appeal should therefore be dismissed and I would make an order nisi of costs in favour of the defendant.

Hon Le Pichon JA:

57. I agree.

Hon Burrell J:

58. I agree and have nothing to add.

Hon Rogers VP:

59. There will therefore be an order as set out in paragraph 56 above.